Investors with an eye on the healthcare sector might find Varex Imaging Corporation (NASDAQ: VREX) an intriguing prospect. As a notable player in the medical devices industry, Varex specializes in X-ray imaging components, catering to both medical and industrial applications. Operating globally, the company has carved a niche in developing innovative imaging solutions used in diagnostic and security applications.
With a market capitalization of $477.76 million, Varex Imaging currently trades at $11.46 per share, showing marginal movement with a 0.01% price change. However, the stock’s potential is underscored by its 52-week range of $6.88 to $16.29, hinting at volatility yet significant opportunity.
From a valuation perspective, the forward P/E ratio stands at 11.91, suggesting that the market anticipates earnings recovery. Although traditional metrics like the trailing P/E, PEG, and EV/EBITDA are unavailable, the forward-looking P/E offers a glimpse into expected profitability, making Varex a stock worth watching as it potentially transitions from loss to profit.
Revenue growth is robust at 11.30%, a positive sign for investors seeking companies with expanding top lines. Nevertheless, Varex faces challenges, as indicated by its negative EPS of -1.70 and a troubling return on equity of -13.58%. Such figures reflect ongoing operational hurdles, which the management must address to improve investor confidence.
Importantly, Varex maintains a healthy free cash flow of $39.53 million, a critical factor in its ability to reinvest in growth and innovation without relying heavily on external financing. However, the absence of dividend payments, as indicated by a payout ratio of 0.00%, might deter income-focused investors.
Analyst sentiment towards Varex Imaging leans positive, with four buy ratings and only one hold rating. No analysts currently recommend selling the stock. This optimistic outlook is reflected in the target price range of $12.00 to $22.00, with an average target of $17.20, representing a notable potential upside of 50.09% from the current price.
From a technical standpoint, Varex’s 50-day and 200-day moving averages are $11.70 and $10.15, respectively. The stock’s RSI (14) is at 26.20, suggesting that it may be oversold and potentially poised for a rebound. The MACD and signal line indicators, both in negative territory, warrant cautious monitoring for signs of a trend reversal.
Varex operates in a dynamic sector, with its products playing a crucial role in medical diagnostics and industrial security. The Medical segment’s offerings, ranging from X-ray tubes to advanced image-processing software, are crucial for various healthcare applications, including CT and mammography. Meanwhile, the Industrial segment’s focus on security applications, such as cargo and baggage screening, underscores the company’s diversification and global reach.
Headquartered in Salt Lake City, Utah, and incorporated in 2016, Varex Imaging is positioned to leverage its technology and innovation across North America, Latin America, Europe, the Middle East, India, Africa, Asia, and Australia. Investors considering Varex must weigh its promising revenue growth and market position against the challenges of improving earnings and operational efficiency. With a significant upside potential, Varex Imaging could be a compelling addition to a diversified portfolio focused on healthcare innovation.
